Monetary evaluation of end-of-life vehicle treatment from a social perspective for different scenarios in China

Abstract

Every year, a great number of ELVs in China are treated informally, that is without government supervision. Because of conflicting standpoints concerning Chinese ELV treatment, there is a need to compare different treatment scenarios based on their impacts on society as a whole. We extracted three scenarios (i.e. the advanced formal sector, the informal sector and the common formal sector) that represent the current state of Chinese ELV treatment, and tried to examine them for societal effects. A framework was proposed for modeling the social value and cost of ELV treatment in the three scenarios, which considers externalities in both the consumption and treatment process stages. A wide variety of data resources were employed and critical externalities were monetized using several valuation methods. It was found that Chinese ELV treatment causes huge loss to society due to the extensive existence of informal sector. Of the three scenarios, the informal sector ranks last for net social value due to the higher costs of traffic accidents and airborne emission caused by the low-quality products, environmental costs of environmental-unfriendly treatment process and taxation losses. However, it ranks top for net private value because of the higher sales in products. Only the net social value in the advanced formal sector is positive because of its consideration to environmental protection. The integration of these two sectors is therefore suggested to be worth considering to improve the status quo. The results also show that the absence of waste disposal fee and decontamination costs results in much higher social cost in the common formal sector than in the advanced formal sector, which indicates the exante environmental measure is superior to the ex-post environmental measure for Chinese ELV treatment.